An Interview with Stanford Newman

When it comes to lengthy perspectives on the world of cigars, it
is hard to beat Stanford Newman. Joining his father's
business at the age of 18 in 1934, Newman recalls the days when
manufacturers agonized over a price increase from five cents to
six cents. He worked part-time through his college days
and began a full-time career in the cigar business in
1938, resuming his career in 1946 after serving in the Second World
War. Today, having bought out his relatives
11 years ago, Newman remains the proud patriarch of
J.C. Newman Cigar Co. (formerly M&N Cigar Manufacturing), which
owns hand-rolled brands such as Diamond Crown,
Cuesta-Rey and La Unica, all of which are made by the Arturo
Fuente family in the Dominican Republic. His sons, Eric and Robert
Newman, oversee the daily operations of the company, and a 15-year-old
grandson, Drew, hopes to join the company full-time after he
graduates from college.

In a comprehensive interview with Marvin R. Shanken, editor
and publisher of Cigar Aficionado, Newman reminisces about the cigar
industry, and offers his impressions of the impact of today's cigar
boom.

Cigar Aficionado: Tell us about the cigar industry in
America at the turn of the century.Newman: My father started in business in 1895. He was a
journeyman and cigarmaker. He learned to make cigars by hand. His
mother paid $3 a month for three years for an apprenticeship, and he
finally became a journeyman. He worked for a factory for six months
and it went out of business.

CA: Where was this?Newman: In Cleveland, Ohio. My father came from
Austria-Hungary in 1888 with his family and he had five brothers. Each
brother learned a trade. My father decided to become a cigarmaker, and
he learned to make cigars by hand. After he lost his job, his mother
got him an order for cigars from a grocer where she used to shop. Now,
at that time, there were few brands; most cigars were
generics. The grocer gave my father an order for 500 cigars and he
started from there making his own cigars. He finally got an order for
5,000 cigars from a wholesale grocer who also distributed
cigars. Suddenly, he had to make a lot more cigars, so he got two or
three of his buddies together and they started in.

CA: At that time, how big or how important was the cigar
industry in the United States?Newman: Remember that all cigars were made by hand, and
there were over 40,000 cigars factories in 1895 across the country. In
fact, those 40,000 had federal licences. It makes sense. It took very
little capital to get into the cigar business. A person could go into
manufacturing cigars with 10, 20, 30, 40, 50 dollars. In all the major
cities in the United States, there were cigar dealers, wholesalers
that sold tobacco by the pound.

CA: Let me go back a second. Why did the federal government
license cigar manufacturers? You didn't need a federal license to make
dresses or shoes, or to sell groceries. Why cigars?Newman: The federal government wanted to collect taxes on
cigars. At that time, you had to go to the post office and buy stamps
to put them on cigars boxes, whether they were boxes of 10, 25 or
50. You put them on the boxes and you sold the boxes. But you couldn't
sell the box of cigars at all unless it had a stamp on it.

CA: How big was the cigar industry in terms of the number
of cigars produced and sold at the turn of the century?Newman: The cigar market was probably perhaps two or three
billion. At the height of the 1920s, I think there were nine to 10
billion.

CA: How were the cigars sold? If there were that many
factories, were there even more cigar stores?Newman: No, there weren't very many. There was usually one
or two in each city that were exclusive cigar shops. Most of the
cigars were sold through grocery stores. There were not any real cigar
distributors at that time. All the wholesale grocers that supplied
grocery stores handled tobacco products. There weren't any cigar
jobbers probably until maybe in the '20s.

CA: Later on, in the '40s or '50s, there was a huge boom in
cigar stores.Newman: Yes. When I grew up in the '20s and the '30s, there
were two chains. The biggest was United Cigar Stores. They had 800
stores. They went into every major city. And in every major city in
the United States, they'd tried to get a downtown corner. There was
another one called Schulte Cigar Stores.

CA: When was the retail trade at its peak?Newman: Remember that the outlets were a lot different than
today's cigar stores. They were on the corners in the best traffic
patterns of the community. Most of them established themselves as
cut-rate stores. They gave out coupons, especially the United Cigar
Stores, which attracted a lot of people. Eventually, in the late '40s,
the rents just got too high for most of them because it was hard to
make money. The basis of their business was cut-rate cigarettes, pipe
tobacco, chewing tobacco; and cigars were less and less dominant.

CA: Earlier, you said that all the cigars at the turn of
the century were handmade. When did the transition to machine-made
cigars take place?Newman: Let me go back a little here, too. There was a man
by the name of J.B. Duke who put all the cigarette companies
together. He also purchased and bought every machine that was ever
patented to make cigarettes. He formed the American Tobacco Co.
In 1911, Teddy Roosevelt, who was a trust-buster, broke up the
cigarette companies. That's when companies like United States Tobacco
were started, and their business was the snuff or chewing tobacco
business. The American Tobacco Co. had all the cigarette machinery,
and they started making a cigar-rolling machine. My father bought some
of the first machines that the company put out in about 1915. My
father had one factory that he opened using machines exclusively to
make cigars. You know, cigarettes weren't that popular at the time. It
was during World War I that the cigarette companies gave out millions
of packs of cigarettes to the Red Cross and they became apart of the
rations pack. So, when [the soldiers] came back they smoked
cigarettes, not cigars. At the time, my father had three factories,
and he had to close two of them because none of the new smokers wanted
to smoke cigars.

CA: When did cigars, machine-made cigars, really become the
dominant part of the cigar industry?Newman: In the early '20s. When the General Cigar Company
and the Consolidated Cigar Companies and others were formed in the
'20s, they all put in machines. That drove a lot of the small cigar
factories out of business because they couldn't make as many. The
smaller factories didn't have the capital to buy machines and
eventually they began merging into bigger companies or they went out
of business.

CA: Was the quality of the tobacco used in the 1930s the
same whether it was handmade or machine-made?Newman: Yes.

CA: Then it was just a question that producing machine-made
would involve lower costs and that would drive the handmade guys out
of business.Newman: There was one other factor. These large factories
started to grow their own tobacco in Connecticut; Consolidated grew
their own. Bayuk was a big factor. Bayuk made Phillies, which used be
known as Philadelphia Handmades, and they changed the name when they
went into machines, to Phillies. It was a cost factor, but on the
tobacco end. The smaller companies couldn't buy the tobacco as cheaply
as the big companies could produce it for.

CA: The tobacco then became the key. In 1900, all cigars
were handmade. They were not branded, so it was essentially a
commodity. Where did the tobacco come from?Newman: In 1900, Connecticut shade had just started in
quantity. But most of the wrappers were from Sumatra or Java.

CA: What about the binder and the filler?Newman: Some binder and filler had started to be grown in
Connecticut at the turn of the century. And much of the filler came
from Havana, Puerto Rico and Pennsylvania, to a great extent. Most of
these cigars had a blend of Pennsylvanian and Cuban tobacco.

CA: How did the tobacco change in the 1930s when
machine-rolled cigars became dominant?Newman: In the '30s, the wrappers were coming from
Connecticut and also from Sumatra and Java.

CA: What about binders and fillers?Newman: The binders were mostly coming from Connecticut.

CA: The Dominican Republic and Honduras and Nicaragua
didn't play any role?Newman: They didn't exist.

CA: What role did Cuba play?Newman: Cuba was supplying tobacco to most of the
manufacturers, in Tampa. After we moved to Tampa, up until the
embargo, we used 100 percent Cuban tobacco.

CA: You were buying tobacco in bulk from Cuba in the 1950s?Newman: Oh yes. We made 100 percent Cuban cigars.

CA: When did the Tampa manufacturers begin using Cuban
tobacco?Newman: It started before the turn of the century. The
cigar business got started in Key West, Florida, and most of those
people were from Cuba and Spain. They bought all their tobacco from
Cuba.

CA: Between the turn of the century and the 1960s, the
cigars that were made in Tampa were essentially all from Cuban
tobacco.Newman: That's right.

CA: Although you said cigars weren't branded, in fact there
were thousands of what we would today call private labels, where
practically every corner store had its own brand. When did branding as
we know it today begin with cigars, and at what point was the first
national major brand created?Newman: You're right. The brands started to be made at the
turn of the century, but we called them generic brands. They were
essentially a lot of little brands that were created for different
retailers who wanted their own labels. Some small buckeyes [small
operators] also created their own brands. Let me backtrack for a
second. I asked my father once how he really got started in the
business. He said if someone went out of business in the early 1900s,
he would buy the labels. If he bought the labels, he would be assured
he would get a little business either from the retailers or companies
who used those brands. When the cigar companies began to merge, some
of the bigger ones, such as General Cigar and Consolidated, started to
make brands with a wider distribution. They were able to advertise and
have more of a national presence. However, even some well-known brands
were still pretty much local. People didn't travel a lot until after
World War II and there were certain brands that would be predominant
in Akron or Buffalo, or some specific city.

CA: What was the first national cigar brand?Newman: The first one I can remember is White Owl and there
were not many others until the 1930s and '40s.

CA: Was cigar smoking a popular pastime?Newman: At the end of World War I was one peak when there
were about eight billion cigars sold, but it declined after that until
1964. After the surgeon general's report on cigarettes in 1964, it
rose again for a while, but it was in steady decline from then until
1992, when less then two billion cigars were sold.

CA: A typical cigar smoker smoked how many cigars a day in
the '30s, '40s and '50s?Newman: Well, in the '30s most cigars were sold for a
nickel or two for a nickel. Most smokers had four or five cigars a
day. They were very price-conscious. When we raised a brand from five
cents to six cents in the early 1940s, we lost half the business. But
five a day was about average.

CA: What was the average size of a cigar?Newman: The average size of a cigar was a perfecto shape
that was about 5 1/4 [inches] by maybe 40 ring gauge. They were all
perfectos. The pressed bunch didn't come along until later on.

CA: After the embargo began, how did the cigar industry in
America change?Newman: Up until the embargo, most of the premium cigars
that were made in the United States were made in Tampa. At that time,
they were made of all-Cuban tobacco. We had an association in Tampa
which owned a little boat that went back and forth between Tampa and
Havana, called The Privateer. It brought tobacco to Tampa twice
a week. The boat was usually full. Most of the factories in Tampa
stored all their tobacco in Cuba, and they would send down orders and
they would load the ship with what they needed for the next week.

CA: Where was this tobacco storage? In Havana, or in the
Pinar del Río?Newman: Most of tobacco was kept in warehouses in Havana
after the leaves were packed. Most of the factories in Tampa had their
own processing warehouses. Some of them would buy directly from the
farmers and they would process and pack their own tobacco.

CA: OK, so up until around 1960, was there such a thing as
a premium market segment like there is today? Were there expensive
cigars? Were there cigars made from a much higher quality tobacco that
would differentiate them in terms of quality and/or price?Newman: The cigars that were made in large volume were 26
cent cigars, which had been 25 cents up until about 1954 or 1955. The
26 cents stayed through the embargo. You couldn't get 27 cents because
people wouldn't pay 27 cents for a cigar.

CA: Was there a premium industry?Newman: Some of the factoriesæCuesta-Rey, Gold
Labelæmade some higher-priced premium cigars for 35 cents. There
were very few cigars that were made in Tampa that were over 35 cents
because there was no market.

CA: Is Tampa the one area of the country that made the
cigars?Newman: That was the only area that made Clear Havana
cigars, except for one factory in New Jersey that was run by the
American Tobacco Company in Newark that did Clear Havana, too.

CA: So, in the 1950s and in the early '60s, what brands
would you say were the premium cigars of that period?Newman: As I said, Gold Label had some sizes and Bering
did, too. They were a little bit more than the 26 cents, but I would
say 90 percent of the cigars sold were sold for 26 cents or
below. There were a lot of cigars that sold for 10 cents. They were
made of the by-products from the factories. They were made of the
short filler and they were made by machine. But in Tampa, they didn't
make any machine cigars until about 1950 or 1952. It was all handmade.

CA: The embargo arrives, and 100 percent of the cigars in
Tampa are made with Cuban tobacco. What happened to the cigar industry
there?Newman: In the beginning, we thought that the embargo would
only last for about six months. We didn't believe that the
U.S. government would keep an embargo. But when we started to run out
of Cuban tobacco after two or three years, many of the factories
wanted to sell their businesses because they couldn't get any more
Cuban tobacco. Gold Label was sold to General, Bering was eventually
sold to Swisher, and Perfecto Garcia was sold to United States
Tobacco.

CA: Does that mean those factories stopped making cigars
for a while, or did they get tobacco from other places?Newman: They tried to get tobacco from other places. We got
tobacco, mostly wrappers, from Cameroon in 1962. But the price went up
from $7 to $14 [a pound]. Nobody in Tampa or in the United States
wanted to pay that much, because in Cuba they only paid $6 or $7 [a
pound] for tobacco.

CA: Was this the first time the Cameroon wrappers were
brought in?Newman: That's right. There was no reason to use Cameroon
tobacco when you could get Cuban tobacco. We used the top grades of
Cameroon, because I thought that if we had something of quality, we
could keep our market. It was not exactly a substitute. It had a
different taste, but it was a very, very fine wrapper.

CA: Who went out to find the Cameroon wrapper?Newman: Cameroon wrappers were being sold in Europe to the
European manufacturers at that time. They started an inscription,
actually an auction. Inscription is something where you put in sealed
bids, but it's really an auction. They started that in about 1954 or
'55.

CA: Where did the binder and filler tobacco come from?Newman: The binders came from Connecticut, and we also got
wrappers from Connecticut. The filler started coming in from the
Dominican Republic and Nicaragua and some from Honduras. But what
really changed the business in Tampa so rapidly was that Cuban cigar
manufacturers after the embargo went to Nicaragua, the Dominican
Republic and Honduras. They also started selling cigars in New York
and California and Detroit and Cleveland and other places, like
Miami. They made cigars larger than we did in Tampa and charged less
money than manufacturers in Tampa could. And, you couldn't change the
size of the machines in Tampa. Cigars started to be made, too, in
Santiago, the Dominican Republic.

CA: What about taste and quality?Newman: The quality was good because a lot of these people
coming from Cuba had a good taste for tobacco, and they started to
grow Cuban-seed tobacco in the Dominican Republic. Now, the Dominican
Republic had the soil that was very similar, especially around
Santiago, to Cuban soil.

CA: In effect, the Dominican Republic tobacco industry
began to evolve when the Cubans left Cuba and searched for new homes,
and began to practice their trade in a comparable climate. How were
the cigars different? And what was the reaction from people who had
been smoking Cuban cigars from Tampa all these years and now, all of a
sudden, had to smoke something different?Newman: Cuban tobacco had its own distinct flavor. But the
people couldn't buy Cuban cigars anymore, so they had to change their
taste. Some of the Cubans brought tobacco seeds from Cuba into
Nicaragua and Honduras and the Dominican Republic. It was a heavier,
more aromatic type of tobacco. They started to grow the Cuban-seed
tobacco, and the majority of the cigars that were made in those
countries were made from that tobacco. But they didn't taste
the same.

CA: What was the reaction from cigar smokers in America
when they were no longer able to buy Tampa-made Cuban cigars and they
were now given this alternative? Was there a good reaction? Was there,
you know, "This is not my cigar. It doesn't taste a bit like it," or
"Hey, this is nice"? What was the reception for the Dominican cigar?Newman: The cigars that started to come from Honduras,
Nicaragua and the Dominican Republic, the smokers accepted them
because they couldn't buy anything else. Some of those cigars were
better than others, especially the ones with aged tobacco. But those
are the ones that even today people like better.

CA: Is it fair to say that the embargo, because it
permitted these Cuban-exile cigarmakers to set up operations in other
countries, triggered the beginning of the premium cigar market as we
know it today in America?Newman: When they started to make cigars in the Dominican
Republic and Honduras and Nicaragua, they were priced at the same
prices that we were selling them in Tampa, 26 cents. However, they
took the business away from Tampa because those new cigars were
handmade.

CA: After the embargo, to the best of your recollection,
what was the first premium brand to surface and emerge as a premium
handmade cigar sold in America from the islands?Newman: The first brands that came into the United States
that were handmade were from the Canary Islands. One was Montecruz,
brought in by the Dunhill people. And there was, I think, Don
Diego. There may have been one or two others, but they were small.

CA: What about Macanudos?Newman: Macanudo, I think, started out in about 1964. I
remember that my friend Martin Annis in Tampa told me that he'd gotten
a call from Edgar Cullman [Sr.], on vacation at his home in
Jamaica. He wanted to know if he should buy a factory called Temple
Hall that was making about four million cigars a year. He asked Marty,
who was already working for the General Cigar Co. at the time, whether
he thought he could sell the cigars. Marty said, "Go ahead and buy
it." So, Cullman bought the Temple Hall factory. Now, there were no
Macanudos sold in this country at the time. There were a few Temple
Hall cigars sold, there were some other brands that were sold by
Faber, Coe & Gregg. Most of the Macanudos at that time were
sold outside of the United States.

CA: Was Royal Jamaica around at this point?Newman: Royal Jamaica came in a little bit later. That was
a family by the name of Gore, who made them in Jamaica.

CA: Tell me how your relationship with the Fuente family
began.Newman: In 1980, I saw what was happening to the whole
industry in Tampa. It was clear to me then that these people from
Nicaragua and the Dominican Republic and Honduras were taking
some of our business. It wasn't critical for us because our business
was so strong. We were able to sell some of our machine-made
Cuesta-Reys, especially our Cuesta-Rey '95s, because the quality was
so good. We were the only ones at that time using Cameroon tobacco. We
were able to sustain our brand. Still, we were looking to have our
cigars made in Nicaragua, or in the Dominican Republic, by
hand. After making a survey, I realized there was no way that I could
have cigars made unless I'd run the factory myself. I was a little
frustrated about that because I never found a factory that I could
connect up with.

In 1986, Carlos Fuente [Sr.] was running a factory in Tampa for
himself. He had also set up shop in 1980 in the Dominican
Republic. Just prior to that, for a couple of years, he had been
manufacturing in Nicaragua and he got burned out there from the
revolution. So, he went to the Dominican Republic in 1980 with a
couple of cigarmakers and he started a factory down there. I'd known
him for about 20 years. I thought he was always one of the finest
cigar manufacturers, even though he was small at the time.

When he came to me in 1986, right after I had bought out my other
family members, he walked in and he said that he would like to close
his factory in Tampa, and he'd like us to make cigars for him. I said,
"Well, of course, let me see what the prices would be." I did that,
and realized I couldn't make any profit on the deal. So, I said to
him, "I'll make them on one condition: if you'll make cigars for us."
And he said, "Well, I'll do that."

I was looking for somebody to make cigars who I could really
trust. And if there's any person in the world that I'd known who I
could trust, it was Carlos Fuente. And so I said, "Well, let's sit
down and make four or five shapes, and let's get a blend that you
think will sell, and we will put them in bundles." I had a brand that
we'd bought when we acquired Cuesta-Rey called La Unica. We weren't
using the label, so I said, "Let's put this in bundles of 20 cigars of
five sizes and we will sell them to 300 or 400 cigar stores. In six
months, if we see it's successful, if people like them and they like
the blend, we'll take the brand off the market and we will start
slowly changing Cuesta-Rey to hand-rolled, and have you make it for
us."

The La Unicas were so good that today, I think they are the
largest-selling premium cigar in bundles. We never took them off the
market because the brand was so good. One thing that always impressed
me with Carlos was that he had the same feeling for the
business that I did, that he believed in large inventories. And all
the money that he made from 1980 till 1986, he put into tobacco. All
his profits that he made. Because he felt that he could only make a
good product if he had aged tobacco, and I know that you can't make
good product in cigars unless you have an inventory.

CA: What kind of volume did you do with La Unica in 1996?Newman: La Unica can be much bigger, but, of course, it's
like all the other cigarsæwe can only make several million of
them, and we just keep them down, but we've increased the prices like
every other manufacturer. When we first put La Unica on the market, we
labeled it La Unica Primeros because all the cigars that were in
bundles on the market at that time were seconds from factories. And, I
wanted to make darn sure that we could charge more than what the
bundles go for. These cigars are primeros.

CA: So La Unica are not seconds.Newman: No, they're firsts. They're primeros, and
that was the thing, and I wanted to put them on the market. I didn't
want to have any cigars with bundles. At first I didn't like the idea
of having bundles. I wanted to take them off the market, and I planned
to, but it became successful.

CA: How did Cuesta-Rey become part of your company?Newman: Cuesta-Rey was a brand that was started in Atlanta
in 1884 by Angel Cuesta Sr. He'd come from Spain. In 1886, he
moved his factory operations to Tampa, when Tampa was being
established as a cigar manufacturing city, and at that time, the
Chamber of Commerceæthey called it the Board of
Tradeæwould build a cigar factory and all the houses around it
for the workers if they could get somebody to lease it for five
years. And the Cuestas started a factory, in 1886, in Tampa. The
Cuestas and I got to know each other pretty well, and when my father
passed away, in 1958, I approached them about buying their
business. We made a deal and it worked out very, very well.

CA: Did you buy the brand name, or the business?Newman: We bought the business. We bought the tobacco. We
bought whatever equipment we needed, and anything that had a
Cuesta-Rey name on it. They had some other brands, White Heather and
La Unica, and some other brands. Now, Karl Cuesta wanted to
also give me some brands that were registered in Cuba, like El Rey del
Mundo. And Karl said, "Just pay me for the labels." And
I said, "I'll buy them, but I'll throw them away. I'm interested in
just having one brand." We had the Rigoletto brand, which was our
high-priced brand. We changed it to a medium-priced brand and we made
the Cuesta-Rey the premium brand.

CA: How big was the Cuesta-Rey business that you
bought in 1958?Newman: At that time, it was maybe four or five million
cigars.

CA: And revenue would be?Newman: Not too much. Most of their cigars were on the
cheaper end of the spectrum.

CA: Was it a good buy?Newman: Cuesta-Rey was a name that had been established all
over the world. The label had not been hurt like a lot of other brands
that had once sold for 30 cents, and were now selling for 10
cents. The brand was never hurt, and that was one of the reasons I was
interested in it. But another reason I was interested was that there
was a Cuesta-Rey made in Cuba, but the government never registered the
trademark. I knew we had an opportunity because Cuesta-Rey was one of
the few brands that was being made in Tampa with a Cuban brand
heritage that could be sold all over the world. The factories that are
making Hoyo de Monterrey, H. Upmann or Partagas in this area can't
sell these brands all over the world. So, in the last two to four
years, we started to sell our products in the Pacific Rim.

CA: When did you decide to create the Diamond Crown brand?Newman: In 1990, I decided I'd been in this business for so
long that I wanted to create something different. The largest ring
gauge cigar was about 50; there were a few 52 ring gauges. I thought
we could make one that was 54 ring gauge. So we created five sizes,
from 4 1/2 to 8 1/2 inches. All 54 ring gauge, all the same blend. The
only difference was the size of the cigar. And at that time I talked
this over with Carlos Fuente Sr., and Carlito [Carlos Fuente Jr.] to
see if we could make something that was very special. What I wanted to
do was to take Connecticut wrappers that were several years old, and
keep them for about five years, and take this wrapper and re-sweat it,
you know, open up the bales again and re-ferment it so that the
harshness would disappear from the leaf. I wanted to take filler
tobacco that was four or five years old and, combining the two, make a
cigar that was special, even if it would take me two or three years to
do it. So, after three years, new cigars were coming out that were
more expensive. I had wanted to have the most expensive cigar on the
market, and by 1994, there were so many new cigars coming out with
bigger ring gauges, as big as 54, a few of them, and some of them were
as expensive. Now, by the time we got them out, our cigars were still
expensive. Today, they sell from, I think, between $8 and $16. We
started a year ago in California. No place else. We thought we'd have
a lot more cigars. We have two teams in the Fuente factory. The people
were being paid by the day instead of by the piece, and they only made
about 75 cigars a day. We thought we'd put out that way maybe 150,000
cigars. But then lo and behold, as we started out in California, we
lost one of our teams. Somebody came in there and [took] not
only ours but some of the people that were making some of the Fuente
cigars, and these were some of the best people. They stole our
cigarmakers and they made them supervisors in some of these new
factories. So, instead of making 150,000 we made, maybe, close to
100,000, and that's about what we're making today.

CA: In 1996, you shipped how many Diamond Crowns?Newman: About 100,000.

CA: In 1997...Newman: We won't be shipping any more [than 1996]. We hope
to ship the same.

CA: So, in other words, are you saying that for the near
future...Newman: We hope to be back to about 150,000 a year and
more. But it's very difficult down in the Dominican Republic because
they're stealing our people. They're paying $15,000 Dominican, as much
as $1,500 American, to try to steal the better cigarmakers from the
Fuentes. I think they've lost 90 workers this year. It's difficult.

CA: Is there a plan to ever get this to a million?Newman: Oh yes, yes. There will be a plan once this
situation settles down. This may be another two or three years. The
Fuentes are training people, but the whole situation, I think, is
difficult.

CA: Do you have tobacco set aside?Newman: We certainly do. Not millions, but we have tobacco
aging for the Diamond Crown.

CA: Can you get up to a half a million?Newman: Maybe eventually to half a million, but I don't
think we'll do any more than that. It may take two or three years. And
the plans were that we were going to sell the Diamond Crown on the
West Coast and come east, and a Fuente Fuente Opus X was going to go
from the east to the west. The Fuente Fuente Opus X--I think they're
only sold up to the Mississippi River today, although they're probably
black-marketed all over.

CA: How do you build a business that's so strapped from a
production side? What goes through your mind?Newman: Well, my way of thinking is that the Fuentes are
the best manufacturers by far, and have the best value of any cigar
manufacturer in existence because of the way they make their cigars,
and the way they run their [business]. They don't have anything
that's fancy; their overhead is very low. And they're so good because
they live there. And the theory goes back to when I used to go to
Cuba; I used to know that the best tobacco was kept in Cuba by the
Cuban manufacturers.

CA: How old are you now?Newman: I'm 80.

CA: Eighty years old! You spent your whole life in the
business. You've seen the rises and the declines and the most recent
resurrection, if you will. Things have never been so good. You have
your kids in the business today. But you can't get enough product to
really allow your business to rise to the level that the market
wants. Is this very frustrating to you?Newman: It is, but we're hoping that it will alleviate
itself. I think in time--it may take a year or two--it will alleviate
itself, because I think this competition for tobacco, the competition
for labor will stabilize sometime. It will certainly be more stable on
the popular brands. But it will not stabilize for the new brands,
which are destabilizing the market very bad down there. They're paying
a lot of money for tobacco, and they're paying for tobacco that some
of it is good, but some of it's very new, very green. They say that
when they go out to sell the cigars, it's young tobacco. I think a lot
of these things will level off.

In the meantime, the Fuentes are building a fifth factory. They
have one factory that has, I think, 200 or 300 learners
[apprentices] in there. The other people in the
businessæGeneral Cigar, has a similar amount of learners,
Consolidated has learners. And, I think if the main brands become more
plentiful, it will stabilize the whole industry. But, as I say, it is
frustrating right now. But, I'm real happy to see that in the computer
in our factory, for our distribution system, that we sell to 2,000 or
2,500 retailers, and every time we get a shipment in from the D.R.,
they get some cigars.

CA: What made you go into the humidor business? What was
the thinking behind that?Newman: We have bought and purchased from Reed & Barton
over the years, humidors that we put in 20,000 restaurants. We had our
better sizes of our Cuesta-Rey [cigars], our numbers 1s, 2s and
3s, the more expensive ones. [Selling cigars to restaurants]
was one of the ways we marketed them. And we had them make
humidors so we could give them to the restaurants. But for the past
two or three years, we had lost most of our restaurant buiness because
the owners often couldn't sell cigars in the restaurants. We hadn't
done very much business with them recently. About two years ago
Reed & Barton said to us they were beginning to get requests
for humidors from jewelry stores and department stores. They wanted to
know if they started to sell humidors, whether we would go into the
business [distributing them]. And, at that time, I, and Eric
and Bobby, conducted some surveys and talked to a lot of retailers:
"If we had humidors, would you buy them?" They'd be made by Reed &
Barton. "Oh, of course we would, because when we place orders with
people from this country, from Italy, from Spain, we don't get the
humidors. We place them at the RTDA [Retail Tobacoo Dealers of America
convention] in July or August, and they come in in January or
February." I got the idea that we would keep the inventory, and if
people wanted to buy one, or if they wanted to buy 10, that it would
be a very good idea. And we've been very successful because Reed &
Barton goes back to 1824. They've made jewelry cases and cases for
their silverware.

CA: In 1996, how many Diamond Crown humidors did you
sell?Newman: About 40,000.

CA: Forty thousand! Maybe you'll go out of the cigar
business! [Laughter]Newman: We have some new accounts [about which]
Carlos is saying, "We can't sell them cigars, but we can sell them
humidors." I mean, we haven't opened a new account for two years on
Cuesta-Rey or Fuente cigars.

CA: You said earlier that your father started in the cigar
business in 1895.Newman: That's right.

CA: You bought out your relatives in 1986.Newman: In 1986.

CA: So, it's your family's business. You have two sons,
Eric and Bobby, who are in the business. You have a grandson, Drew,
who plans to get more involved. What's your dream for your
family and the future of your family business?Newman: My family can be in this business for another 100
years if they will apply what my father told me. He said, "If you make
cigars of quality, you can stay in business for another 100 years, but
if you make something cheap, somebody can always make them cheaper and
you'll go out of business in six months." He impressed that upon me
all the time, that we should strive to make something of quality. Now,
something has happened in our whole culture. There're a lot of upscale
people. In the past 20 years, you see ads in the paper for people
where they can get more interest on CDs. There's so much disposable
income. We have a situation in our country where there are trillions
in mutual funds. Where did the money come from? That's all disposable
income. It's from somebody. And so, we have a market out here that
people will enjoy a product if they enjoy life, and they can enjoy a
cigar. That's why I feel that [our family business is] going to
be here for a long time. But, my sons have to be very, very careful
for the future of the business that they stay focused on what they're
doing. And, one of the things is if they want to hold on to their
business or if they decide to go public. If they decide to go public,
then it's a public business and it's no longer theirs anymore.

CA: What would you recommend them to do?Newman: I recommend that they just keep on working, and
enjoying life, and try to make the quality products and try to be of
service to customers and try to have a mission in this world for the
company and for themselves. Not just making money, but for something
to help humanity.